Staying in hotels and using banquet halls in the city has become costlier as the Chandigarh Administration has increased luxury tax from 4% to 8%.

The hike in luxury tax on hotel rooms and banquet halls will come into force with immediate effect. The decision has been taken to bring the rate of luxury tax on a par with that of Punjab, which is 8%.

For living in hotel rooms, consumers will have to pay 16.70% taxes in the form of sales tax at the rate of 8.70% and luxury tax at the rate of 8%. For a room of Rs 2,000, consumers will now have to pay around Rs 100 more. Similarly, for hiring a banquet hall, one will have to pay 14.50% as sales tax and 8% as luxury tax.

Criticising the administration, Ashok Bansal, general secretary of the Chandigarh Hotel Association, said that the hike would put an additional burden on consumers. There was no need for the hike as Goods and Services Tax (GST) Bill was likely to be passed by Parliament shortly.

The administration is also planning to increase value added tax (VAT) on motor vehicles and petrol to bring it on a par with that of Punjab. At present, the city residents are paying 12.5% VAT while in Punjab, VAT on motor vehicle is 13.2%. At present, Chandigarh has the lowest VAT of 20% on petrol while Punjab and Haryana charge 32% and 26%, respectively. In July this year, the administration had enhanced VAT on diesel from 9.68% to 16.41%. “There is a need to have a parity in taxes levied in neighbouring states,” said excise and taxation commissioner Jatinder Yadav.